To The Moon

Hello. $NVIDIA(NVDA)$ closed up 8.74 per cent on Thursday at US$227.98, and one report called it the largest single-day gain in market value the company has ever made; $Invesco QQQ(QQQ)$ rose 1.37 per cent. Another headline was blunter: $S&P 500(.SPX)$ was up that day because of Nvidia and nothing else. The other side of it appeared the same day: one report's headline said Nvidia is getting too big, and that this is a problem in itself. An index leaning on a single stock looks good on the way up and works the same way in reverse.

The day before, it had fallen first and turned higher only on the 70 per cent growth outlook for financial year 2028. This session finished the sentence — coverage described the move as its best post-earnings run since 2024.

The firms selling it memory did not follow. $Micron Technology(MU)$ closed down 0.32 per cent at US$935.39 and fell a further 1.68 per cent after hours; $SanDisk Corp.(SNDK)$ closed down 0.96 per cent; $SK hynix(SKHY)$ rose 2.27 per cent, the only one of the three to finish higher.

Odder still: the rally had started the previous evening and was then given back in full. On the night Nvidia reported, Micron rose 3.06 per cent after hours and SK Hynix 3.43 per cent; by Thursday's session none of it was left, under a headline saying Micron's Nvidia rally had vanished. At 8.29 that morning a Barron's headline still read "why Nvidia's memory price warning is giving Micron a lift"; by shortly after 11, the same outlet had it "dropping instead".

There are three sourced explanations, and none of them says the price rise is not real. The first matters most: through the worst of the shortage, Micron was signing multi-year contracts. One report put it plainly — why Micron will miss a 50 per cent rise in memory prices. Prices did go up; Micron locked itself in at the old ones.

The second is the same fact seen from the other side. Coverage describes the memory squeeze as cutting both ways: it lifts suppliers' revenue and it lifts costs across the whole AI chain. The other end of the same question is whether that cost, once it reaches the buyers, comes back round to weigh on demand.

The third is external. China's YMTC keeps being named as an overhang for both Micron and SK Hynix. Separately, Micron's chief executive sold 40,000 shares at US$968.90 on 21 August.

The biggest movers that day were not chips but software. $Okta Inc.(OKTA)$ closed up 28.63 per cent at US$172.91, a 52-week high, on 4.5 times its normal volume; $Salesforce.com(CRM)$ rose 22.58 per cent, $CrowdStrike Holdings, Inc.(CRWD)$ 20.50 per cent, $ServiceNow(NOW)$ 10.04 per cent, $Palantir Technologies Inc.(PLTR)$ 4.75 per cent and $Microsoft(MSFT)$ 1.75 per cent.

Coverage puts the move down to demand for identity security for AI agents. As Barron's had it, CrowdStrike and Okta prove that AI security is software's largest market. BofA raised Okta from Underperform to Neutral with a US$170 target, and BMO lifted its target from US$168 to US$187.

The argument that has weighed on software for most of this year is that AI will eat it. On this day a set of results answered it: MarketWatch's account was that Salesforce sparked the rally and pushed back on AI doomsday fears. Separately, Palo Alto Networks is reported to have held acquisition talks with Okta.

Marvell was the day's strangest name. It fell 1.49 per cent in the session and a further 8.02 per cent after hours to US$222.08.

Yet its numbers set records. Revenue of US$2.74 billion, up 37 per cent year on year, data centre revenue up 46 per cent, non-GAAP earnings per share up 40 per cent, and a raised multi-year outlook.

What did the damage was how small the beat was. Revenue and earnings each came in only about 0.7 per cent ahead — coverage used the word "thin" — and the third-quarter gross margin outlook pointed lower. The stock is up 184 per cent this year and trades at 82 times earnings. One headline ran: big expectations outweighed solid earnings.

That lower margin guidance is the same problem Nvidia had the night before. The difference is that Nvidia passed part of the gap on, while Marvell's share price left no room for it.

The optical names alongside it did not fall during the session: $Lumentum(LITE)$ rose 1.82 per cent, $Coherent(COHR)$ 0.35 per cent and $Applied Optoelectronics(AAOI)$fell 0.42 per cent. The sympathy selling reported in that group came after Marvell's after-hours drop.

The circular-financing thread turned a corner that evening. Reports say Nvidia has paused its revenue-sharing arrangements with AI cloud firms; the stock slipped 0.80 per cent after hours on the news. Michael Burry singled out its roughly US$500 billion AI financing arrangement the same day.

The language around Nvidia had been escalating for two days: first a banker to the AI boom, then something closer to the central bank of AI. On this day it pulled back a step of its own accord — nobody stopped it lending; it stopped one line itself.

$Intel(INTC)$ rose 4.36 per cent to US$92.09, within 3 per cent of the US$95 price of its share sale — the institutions that took that US$20 billion in August are close to getting their money back.

Broadcom rose 4.49 per cent. It competes directly with Marvell in custom chips, and coverage says that fight for share is still undecided. Tesla rose 2.60 per cent; Meta fell 0.87 per cent and AMD 0.89 per cent, two of the few large names to close lower on a day of broad gains, with no reason given in that day's coverage.

Risk assets moved together. Spot gold rose 1.12 per cent to US$4,649.60, bitcoin 2.96 per cent to US$81,370, and Strategy 11.54 per cent in the session with a further 3.81 per cent after hours. Equities, gold and crypto rising at once usually says the bet is not on any one asset's fundamentals but on liquidity.

Warsh speaks at Jackson Hole at 22:00 Beijing time tonight. The general expectation is that he gives no clear signal on rates, and Reuters reports that equities had already turned cautious ahead of it. This year's theme is financial innovation and its implications for payments and policy — if that theme turns into anything concrete, the chain most directly affected is not the index but stablecoins and crypto payments.

Marvell's were the best set of numbers on the board and it fell the hardest; Micron's fundamentals had just been confirmed out loud by its biggest buyer, and it fell too. So what set the direction was not whether the number was good, but whether it had already been bought.

The above is personal analysis, not investment advice.

💬 【Talking Point】

$NVIDIA(NVDA)$ has paused its revenue-sharing arrangements with AI cloud firms, on the same day Michael Burry pointed at its roughly US$500 billion AI financing arrangement — and after two days of coverage calling it first a banker and then the central bank of AI. Is a lender pulling one line back a sign of discipline, or the first crack in the arrangement that has been funding this build-out?

💰 【Bounty】

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